SECRETARY RICE: Thank you very much, Minister. Thank you very much for welcoming me here. We have indeed had very good discussions and I found the discussions that you led on the new transatlantic ties particularly interesting and I think we have agreed that we should indeed deepen and broaden our discussions here on the energy front and I look forward to doing exactly that.

I also look forward to this afternoon's NATO ministerial. Thank you for hosting that. We will have an opportunity to talk about Afghanistan, about Kosovo, and of course about missile defense, on which we had just a moment's exchange in views, and then finally on the Middle East where I think we all share the desire to see rapid movement toward a two-state solution, a strong view that the Palestinian people have waited long enough for their state and the Israeli people have waited long enough for the security that will come from having a democratic and peaceful neighbor. And so we look forward to working together as we have, having full discussions, and we indeed keep in very close contact about those policies and I look forward to continuing that work.

So thank you very much for having me here, and behalf of our NATO allies thank you for hosting the ministerial as well.

MR. MCCORMACK: I think we'll start off with a couple of questions from the American press. First, Arshad Mohamed from Reuters.

QUESTION: On the Middle East, what is your view of the Norwegian Government's decision to both recognize the new coalition Palestinian Government and its stated intention of giving it money? Do you believe that contributes to progress, as the Foreign Minister said?

And Foreign Minister, is there any prospect of your actually giving money to the Palestinian Authority directly absent some relaxation of the U.S. Treasury financial sanctions? Do you see any prospect of that happening?

SECRETARY RICE: Well, we have had a discussion of our views of how to best pursue the peace in the Middle East. I think we are all -- we are in agreement that a Palestinian government that fully recognized the Quartet principles would be a very good step forward, and I know that the Minister has worked very hard in contacts that he has had to try and push toward that goal, because obviously the foundational principles for peace include recognition of the right of the other party to exist, the renunciation of violence and the acceptance of agreements formerly signed by the Palestinians.

Now as to contact policy, those policies will vary state to state. Our own view is that the United States will on a selective basis have contacts with those ministers who themselves are committed to the Quartet principles and we'll do it on a case-by-case basis. As you know, I recently saw Salam Fayyad in his private capacity.

We also are very determined that the Palestinian people should continue to receive the help of the international system that they need, and indeed the Temporary International Mechanism that the European Union has put in place at this point the current vehicle to do that. But we are exploring other ways to support Abu Mazen and the Palestinians as they seek peace and as they seek a way to bring their entire political system into compliance with the Quartet principles.

But I just want to note that the Palestinian people have seen an actual increase in aid over the last year despite the fact that the international system has not been able to give money directly to a government headed by Hamas.

FOREIGN MINISTER STRE: Let me say that what the Secretary is saying is true; the money amount has gone up. But now, about 50 percent or more is coming through humanitarian channels so Norway's position has been as we normalize relations that we should be able to give money in a more normal way, and that's why we wait for the Minister of Finance in which we place great trust to be able to receive money normally through a minister of finance or through a mechanism which is under his control. And I hope that will be happening soon because a country which is receiving more than half of its resources through humanitarian channels cannot control that money, and that (inaudible) important.

Norway has normalized relations with the government, which means that we talk to them. For one year we did not talk to the Palestinian Government; now we do talk to them. That means the opportunity of passing very clear messages and the Quartet principles are Norway's principles. We believe they are also (inaudible) by President Abbas, who is a man we believe we now need to support.

So I think that Norway will be not issuing any carte blanche in any direction. We will be trying to pursue policies which draw in that right direction which can open for negotiations, and we also place very clear expectations on Israel. They also have obligations to fulfill under previously concluded agreements which the Quartet has also reminds us about.

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QUESTION: Madame Secretary, how has the Norwegian ties with the Palestinian government, including Hamas, influenced the U.S.-Norwegian relationship?

SECRETARY RICE: Well, we are -- again, we're allies and I think we are partners in trying to move toward a two-state solution and I see that partnership very clearly. Now I would argue if -- that a Palestinian unity government that is not Quartet-compliant is not helpful in getting to a two-state solution. But we hope that the Palestinians will continue to move toward accepting these foundational principles for peace.

And anyone that can convince Prime Minister Hania that it is time to renounce violence and to accept the right of Israel to exist -- and not, by the way, to recognize Israel, but to recognize the right of Israel to exist, a principle that has undergirded the Palestinian agreement since Oslo, which this country was very involved in finding. So we're not asking that the Palestinian government accept foreign principles somehow; we're talking about accepting the principles that undergird the agreement that Palestinian leaders took (inaudible) in order to make peace possible.

So we think that that is the way forward. We also -- and here, I agree completely with my colleague, Abu Mazen is someone who has accepted those principles. He is somebody with whom we work, someone that we wish to support, and you may know that I've been spending a lot of time in the Middle East encouraging the parties to not just deal with day-to-day matters, but also to begin to sketch a political horizon for one another so that they can eventually move toward negotiations and a two-state solution.

So we've had these discussions and I hope that at some point, the Palestinian leadership of the government will accept the very principles that have been discussed with by Palestinians and (inaudible).